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  • 12 May 2022
  • ICICIdirect Research

Hindalco subsidiary Novelis' Q4FY22 operational performance impacted by one offs

HINDALCO - 469 Change: -9.50 (-1.98 %)

News: For Q4FY22, Novelis's (Hindalco's subsidiary) net sales increased by 34% YoY to US$ 4.8 billion. The increase was primarily driven by higher average aluminium prices and local market premium. Adjusted EBITDA for the quarter stood at US$ 431 million. For the quarter, the ensuing net income attributable to its common shareholder increased 22% YoY to US$ 215 million, while net income from continuing operations increased 21% YoY to US$ 217 million. Excluding special items in both years, for Q4FY22 net income from continuing operations increased 10% YoY to $189 million.

Views: Novelis Q4FY22 operational performance was impacted by one offs. For Q4FY22 Novelis's Adjusted EBITDA of US$ 431 million included approximately US$ 55 million of higher operational costs, primarily in North America, as a result of production and logistics challenges that are not expected to continue in FY23. Q4FY22 also included a US$ 15 million non-recurring regulatory provision. Other higher inflationary cost pressures were largely offset by favorable product pricing. For Q4FY22 Novelis's shipments stood at 987 kilotonnes (KT) higher than our estimate of 970 KT ( Q4FY21 shipments stood at 983 KT). On account of one offs Novelis EBITDA per tonne came in lower than our estimate. For Q4FY22 Novelis Adjusted EBITDA per tonne stood at US$437/tonne, lower than our estimate of US$475/tonne.

Impact: Neutral